All eyes fixed on secretive 'country club': How rollercoaster Quindell became a darling and demon to investors

The deal to sell the golf course barely registered on the City radar. Quindell Country Club had sold itself to Mission Capital, a cash shell registered on London’s junior investment market.

But few in the Square Mile raised any eyebrows – or even noticed.

Fast forward three years and Quindell last month registered as the most viewed stock on the Hargreaves Lansdown website – overtaking normal titans of the retail investment world such as Vodafone and Lloyds Bank.

The transformation, from Hampshire golf club to stock market fascination, has been nothing short of remarkable.

So too has the drama surrounding the firm: since April shares have shed two thirds of their value following a damning research report from short-selling group Gotham City and a rejection from London’s main market.

Quindell processes insurance claims on behalf of other firms, and had struck a number of eye-catching deals with household names such as RAC and Direct Line.

At the helm, and in the glare of the scrutiny, is Rob Terry, the company’s chairman.

He ploughed £12m of his own money into the project at the outset, with the aim of making the group a one-stop shop for claims management on behalf of motor insurers.

Quindell's takeover frenzy

Through a huge number of takeovers, estimated to be around 30 since listing, it has propelled itself into areas including back office administration and outsourcing.

Its growth had been remarkable, with fund managers who avoided the shares kicking themselves for months as they saw their rivals’ performance soar. In March the company continued its upward trend, with a set of annual results that showed sales more-than doubling to £380.1m while pre-tax profits increased three-fold.

It seemed the City’s love-in with the firm would never end. Then, on the morning of April 22 a little-known research outfit called Gotham City alleged the firm was a mesh of imaginary growth and fudged figures.

Its note – entitled A Country Club Built On Quicksand – wiped more than £1bn from Quindell’s value in a day.

Even though Gotham City freely admitted it was profiting from shorting the shares, the note knocked confidence after saying that 80 per cent of Quindell’s profits were ‘suspect’. Quindell sued, calling the criticisms ‘highly defamatory and deliberately misrepresentative’.

Shares are still two thirds lower than they were before Gotham published its research, though last night they closed 9.5p up at 239.5p.

Failure to make it to the main stock market but Fidelity doubles down

The company was dealt a fresh blow last month when its attempt to progress from AIM to the main market on the London Stock Exchange – which would have given it access to a much deeper pool of funds – was unceremoniously thrown out.

In terms of valuation it is within the grasp of the FTSE 250, and at one time Terry had even boasted it could make it into the FTSE 100.

But failure to gain promotion to the main stock exchange is a prerequisite for entry into either index, and hopes of achieving blue-chip status have dwindled.

But not everyone has given up on the company. Yesterday Fidelity, which manages pension funds for millions, doubled its stake in Quindell.

It now holds almost 10 per cent of the company – making it the second largest overall investor after Terry.

But it is not the only reputable City firm to have pumped money in.

The shareholder register shows that M&G – owned by Prudential – and UBS are also major holders.But despite its supporters, the City is firmly split over the company.

One investment advice website Motley Fool has carried articles under headlines ranging from ‘why Quindell provides spectacular value for money’ to ‘why I would never invest in Quindell’.

How exactly does Quindell make money?

Some analysts have refused to cover the firm, believing an accurate valuation is too hard to asses, it is understood.

There are two main reasons for their caution.

One is the opaqueness of its deals. Some of Quindell’s acquisitions have involved a complex web of loans and derivatives flowing between the two companies.

It has been claimed that other companies it snapped up were only incorporated on the same day as the takeover deal completed.

The second reason for caution is said to be Terry himself. City investors remember another acquisition-driven growth miracle company specialising in claims management and led by Terry.

Called The Innovation Group, it floated with a value of £240m in the early 2000s and soared after notching up deals at the rate of one acquisition a month.

At one point the company’s value put Terry in the Sunday Times rich list, with a paper fortune amounting to £355m.

But he and another director – who is also at Quindell now – were both accused of selling shares in the group weeks before a mammoth profits warning that included a £350m writedown on its past acquisitions.

When Terry later resigned, he left with around £20m in share sales and severance payments, it was reported at the time.

More than a decade later City investors have not forgotten this.

Nor too has Terry, who still bans one previously critical analyst from Quindell’s meetings.

Is Quindell being open enough?

But if it was hoping to ingratiate itself with observers and banish accusations of shadowiness, the company has employed odd tactics to do so.

Last month the company, despite attracting more attention than ever before, decided to bar the media from its annual meeting.

In another opaque move it also refused to release the full results of its shareholder ballot, citing a little-used listing rule in its defence.

That a firm run by Terry has encountered controversy does not surprise some City insiders – they say it is just par for the course.